Indonesia Aims for Stronger Economic Growth Next Year

Indonesia's government is aiming for stronger economic growth next year, banking on a recovery in exports, more productive government spending and increased investments.

The government will propose an economic growth target of between 5.4% and 6.1% for the next year, which will be used to base its budget targets, Finance Minister Sri Mulyani said at a hearing in parliament Tuesday. The target is higher than the 5.1%-5.3% target for this year, and compares with the actual 5.02% last year.

Continue Reading Below

President Joko Widodo will officially submit his budget plans to parliament on Aug. 16 for approval.

Ms. Mulyani said the government needs to accelerate economic growth to help narrow the income gap and reduce poverty in the world's fourth-most populous country. She said the recent upgrade by S&P Global Ratings on Indonesia's creditworthiness to an investment-grade level will help boost investment flow into the country.

Analysts estimated that the S&P upgrade on May 19 has helped bring in more than $1 billion into the Indonesian financial market as some large conservative investors, who only invest in assets that have an investment-grade rating from all three ratings firms, started to come to Indonesia.